Gillette says that the fiscal challenges brought about by the flailing US economy and the Iraq war that have affected other federal agencies are also impacting the SEC. Because of this, the SEC’s enforcement group’s 1,000 staff members are choosing to focus on the most urgent matters while maintaining an effective presence in “as many areas as we can.”

The SEC Enforcement Official said the division had developed a number of working groups, each one focusing on one securities enforcement issue. Working groups currently are concentrating on the issues of municipal securities, insider trading and hedge fund misconduct, sub-prime lending-related fraud, and options backdating.

Members of each groups are experts from across the United States that meet regularly via conference calls to discuss any new developments or concerns. The groups also are tasked with giving SEC staff members that are not part of the groups the latest information on the respective issues.

The SEC has also organized a number of issue-specific enforcement teams currently concentrated on frauds involving financial fraud, microcap stocks, Internet-based frauds, and Foreign Corrupt Practices Act violations.

Gillette said that issuers that take meaningful internal steps to remedy problems and work with agency investigators would receive credits that could reduce penalties against them and allow them to potentially escape prosecution.

During her speech, Gillette emphasized that her commentary did not necessarily reflect the SEC’s views.